How much does the average artist earn per play on Spotify? originally appeared on Quora: the knowledge sharing network where compelling questions are answered by people with unique insights. Answer by Glen Sears, Music industry digital strategist & web developer, on Quora:
How much does the average artist earn per play on Spotify? Publications and pundits love to throw around dollar amounts, but these are mostly false figures presented in a vacuum. To see why, it’s beneficial to understand how streaming royalties are generally calculated and paid:
- The monthly revenue of a service (Spotify, Apple Music, et al.) is calculated.
- Record labels have deals in place to get their royalty percentage flat, right off the top, so they receive their share of revenue first.
- The PROs also have flat-percentage deals in place, and they are paid next.
- The streaming companies also retain a percentage for themselves, generally 15–30%.
- The streaming services often contract various back office services, who can get a percentage too rather than a flat fee. At this point you’re looking at around 40% of the total revenue remaining, before artists, songwriters, and publishers have even been considered.
- To establish the “per play allocation,” you then take [remaining revenue / total # service plays in that month].
- Each publisher (the people who represent the compositions) then gets a lump sum payout of [per play allocation * total # plays publisher owns].
- The publisher then delivers royalties to artists and songwriters; it is incumbent on the publisher to figure out how to split up their lump-sum payment to individual owners, and they also take a cut for the administration service.
Clearly, the amount an artist makes is directly tied to each month’s performance. Not just of that artist, but of their publisher and the entire streaming service as a whole.
It is dangerous to speculate on the “average” payout because there are hundreds of ownership cases that affect those payouts. Here are a few, each assuming the artist gets the same number of plays:
- Artist owns 100% of the master recordings and the compositions, as well as performs their own publishing. This artist gets a high “average” payment per play.
- Artist owns 0% of the master recordings but 100% of the compositions, as well as performs their own publishing. This artist gets a semi-high “average” payment per play.
- Artist owns 0% of the master recordings but 100% of the compositions, but has a publishing company handle administration. This artist gets a medium “average” payment per play.
- Artist owns 0% of the master recordings, 25% of the compositions (say, because of three other band members), and has a publishing company handle administration. This artist gets a low “average” payment per play.
There are many other ownership scenarios that further complicate the matter. Additionally, performing artists often get secondary payouts from labels, while the term “artist” often can refer to “songwriter” or “performer” interchangeably, meaning even another party may receive a percentage of the per play allocation.
Streaming services like Spotify or Apple Music are certainly not in a legal position to normalize these payments. Their job is to faithfully fulfill the contracts as they are written.
Per-play allocation looks different to every rights holder, depending on their ownership contracts. This makes finding a reliable “average” virtually impossible, since every arrival at a “rate” is a single snapshot false equivalent. Plus, it would be rendered useless by the next billing cycle anyway.